Forms of Business Organisation

Most foreign firms use the public company Aktieselskab (A/S) or the private company form Anpartselskab (ApS). Danish company law resembles that of other EU countries because many of its provisions are derived from the requirements of EU directives, particularly when it comes to mergers and accounting. It is possible to speed up the process of company formation by buying a company off-the-shelf. This costs approximately 1.2% of the value of the start-up capital for an A/S and 4% for an ApS. All companies and branches must be registered with the Danish Commerce and Companies Agency (Erhvervs-og Selskabsstyrelsen).

From October 2004, it becomes possible to adopt the European Company Statute. This will require a minimum capital of €125,000. The use of this statute will simplify relocation of headquarters (which will be possible without winding up the original headquarters company and setting up another) and mergers.

Requirements for an A/S and an ApS:

Capital

A/S: Minimum of DKK 500,000 (or equivalent in euro, or another currency if permission to use another currency has been obtained), paid up at formation of company. Capital may be supplied in non-cash forms (patents, know-how, machinery) subject to acceptance by the Danish Commerce and Companies Agency. An A/S may hold up to 10% of its own shares. Accumulated deficits must be covered before dividends are distributed out of current and available accumulated profits. Bearer shares are allowed.

ApS: Minimum of DKK 125,000 (or equivalent in euro, or another currency if permission has been obtained). Rules similar to those for A/S companies apply to ApS companies for paying up capital and distributing dividends. An ApS cannot hold any of its own shares.

As of July 1st 2004, all requirements for nationality and residence have been abolished. This applies to founders, directors, board members, branch managers, etc.

Founders and Shareholders

A/S: Minimum one founder or legal entity. Founders do not need to be shareholders.

ApS: Single founder is sufficient.

Directors

A/S: The board of directors must consist of at least three members.

ApS: An ApS may have a management board or a board of directors – or both, but must have a board of directors if it has had more than 35 employees for a period of three consecutive years, ie if it passes the trigger for worker representation at the board level. There is no requirement on the minimum number of members on these boards.

Disclosure

A/S: All companies must file annual financial statements with the Danish Commerce and Companies Agency, including an annual report, a profit-and-loss account, a balance sheet, a cashflow statement and appropriate explanatory notes. The statements must be audited by a state-authorised public accountant or a registered accountant. Financial statements must be approved by the annual shareholders’ meeting within five months of the end of the financial year. Use of International Accounting Standards is compulsory for the consolidated accounts of listed companies from January 2005. The annual report is available to the public, and a list of the filed financial reports is published in the agency’s official gazette and can be accessed through www.publi-com.dk.

All financial reports must be audited. An additional outside auditor must be called in if at least 25% of the shareholders so request. All holders of more than DKK 100,000 in shares equalling 5% or more of share capital or voting rights must be listed; their names, addresses and professions (but not their holdings) must be published in the financial reports. Changes in position involving 5% of capital or voting rights must be reported in the list. During the year, anyone can receive the list of shareholders – including information on holdings – from the agency by paying copying expenses. The ordinary-shareholder register is not available.

ApS: All companies must file an annual financial report with the Danish Commerce and Companies Agency. The A/S provisions on publication, access and audit, along with the provisions for information on substantial holdings, also apply to ApS companies, except for some smaller firms. Special disclosure rules apply to listed companies.